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Part 2 – Are gift vouchers right for your business?
Before leaping in to see how to implement gift vouchers in your business we will focus on the more fundamental question: it’s it right for you. Now the common thought is that gift vouchers only really work in retail businesses, as that is the most common form you see. The truth is that gift vouchers can be used for goods & services. Does your business provide a service? If it does then you could make use of gift vouchers to expand your business and improve your revenue. So what are the questions you should be asking yourself?
As I see it, deciding on if gift vouchers are right for your business requires you to ask the following questions:
Notice that the questions do not actually ask what your business is. That can be largely irrelevant. Any business can have gift vouchers, it’s how they answer these questions that will decide if vouchers would be a worthwhile investment of time and money.
The big question that should be asked first. If a potential client can walk in your door and spend the voucher without requiring any preliminary setup or costs, then you can offer a gift voucher. For example a massage therapist can offer a voucher because the only setup work the client needs is to book a time. An accountancy firm that will have large time costs bringing in a new client wouldn’t fit having gift vouchers. So how do you tell if your business services/products are able to be gifted? The less time setting up a client the better. While walk in and use is the ideal use for a voucher, if there’s only an appointment booking requirement, then a voucher will still work.
A pretty obvious question where if the answer is yes, then you should have vouchers. But there’s the old business truism ‘if they don’t know they won’t ask.’ Unless your clients know you can offer vouchers they won’t ask for them. Even something as simple a sign on a counter and item on the website could be all you need to get people wanting them.
If you are unsure then ask a few clients when they come in if they would like the option of gift vouchers they can give to others. Make sure that you ask a wide range of people to get the feel of your consumer base. If you don’t feel comfortable asking each customer, why not use facebook or your website to put a simple poll to find out if people are interested in your business carrying one.
Given that all businesses have competition, look at your competitors, if they offer gift vouchers then you should offer it too. Not offering the same options as your competition means you’re giving them potential customers and revenue that should be going to your business.
This is an important part of the question of offering vouchers, how frequently you see customers. While a funeral home could offer gift vouchers, and it’s not an industry known for ‘repeat’ custom. Other industries which operate on a continuous service model, a commercial cleaner service for example, aren’t naturally suited to vouchers as it’s more fee based, be it fixed or variable. That being said, there’s still latitude for vouchers in such a business situation. If the cleaning company has a domestic cleaning service, then offering vouchers for that is a good way to promote your business to potential clients.
When they could use a gift voucher also dictates its usefulness as a revenue generator. If your business is rarely used by people, again citing the funeral home, most customers will realise that the voucher will expire long before it’s used. A supermarket is used by most people on a weekly basis so the demand for a voucher is much higher. While there is no general rule of thumb for the frequency of repeat custom, if you have ‘regulars’ then it makes sense to offer gift vouchers as a way to create new ones.
This depends on the nature of your business you are in. Gift vouchers are by their nature meant to bring joy to the recipient. But if you’re in a business that has a negative implication then you won’t have people asking for vouchers. While giving someone a gift voucher to reduce the costs of a funeral is a nice gesture, the implications are quite negative since it relates to death. On the other hand if the same thing was for a florist, that brings a more positive outcome. Dental services would be one that is a ‘maybe.’ While giving a voucher for dental services is implying that the recipient has dental issues, on the other hand because how expensive such services are a gift to reduce the costs would be appreciated. If you’re not sure if you should offer a voucher, this is where surveying your customers will help.
According to Consumer New Zealand the average spend by majority NZ consumers on gift cards (vouchers) was under $80. We look at the chart, more than 75% of the gift vouchers sold were under $80, 31% were under $50. Along with this one of the largest complaints for consumers is vouchers that have money left on them unspent (more than half of the people surveyed have this issue.) This means that for the vouchers to be useful there must be products or services that can absorb the full value of the vouchers.
People don’t mind having to ‘top up’ with more money when they spend, as we have shown in the previous article , it’s the value vouchers that remain unused that annoys them. Ideally you should be able to issue vouchers that match the average sale you make or a sizable fraction of the sale. For example a restaurant average diner spend is $45, two $20 vouchers are more likely to be sold than one $50.
What would happen if your average sale is much higher than the average gifted value of less than $80? That isn’t necessarily an issue depending on your target market. If you provide products or services that have a higher average spend, it’s likely that your customers will be more comfortable with spending more on gift vouchers.
As previously mentioned a large source of annoyance to customers with gift vouchers is having unused cash on them. The simpler it is to spend them, the more likely they will end up spending more than the face value of the voucher. Retail products are easy enough to take care of in a single purchase. Many services are able to be treated the same way. If your business has ongoing costs or a contract then gift vouchers will not work for it. There may be situations where you could offer vouchers though your clients may prefer to pay over installments, but that will be largely dependent on if the service and products you offer are considered ‘giftable’.
So does your business meet the criteria for gift vouchers? If you can answer yes to most or all of the above questions, then gift vouchers are another revenue generating option for your business. Still not sure? You can read the rest of the articles in this four part series. If you can’t wait you then give us a call or email at Copy Express to talk with us to learn if gift vouchers are right for your business
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